Godrej Consumer – Steady Growth but Outlook Not Clear

December 22, 2009

Godrej Consumer is witnessing steady growth across its key soaps and hair color segments. However, compared to Q2F2010, GCPL is likely witnessing slower revenue growth. Importantly, management is less clear about the industry outlook due to the following three factors:

Godrej continues to gain market share in both soaps and hair color segments. Soap revenue growth (volume driven) is likely to be in mid teens and hair color revenue is likely to be around 15-20% in Q3F2010. Recall that GCPL reported 28% and 48% growth in soaps and domestic hair color revenues in Q2F2010.

GCPL appears to be quite keen to expand its presence in the African and East Asian Markets inorganically. Due to the high entry barriers in a few of these markets, the company is primarily looking at an entry strategy through an acquisition.